U. Yedukondalu, Member (Deptl.) -
(1.) THESE 5 appeals art filed against the orders of the Appellate Deputy Commissioner of Commercial Taxes, Visakhapatnam (for short, 'the ADC') and the Joint Commissioner (CT)(Legal), A.P. at Hyderabad (for short, the JC'). The details of which are as hereunder:
The above five appeals relate to the years 1999 -2000, 2000 -01 and 2001 -02 under both the APGST and the CST ACTs. There is common issue involved in these five appeals.
The appellants were registered dealers on the rolls of the Commercial Tax Officer, Rajam Circle, Srikakulam District. They are manufacturers of Polister Texturised Cotton Yarn and Cotton Grey Fabrics. They reported turnovers through monthly returns for the said years. The CTO completed the final assessment of the appellants and passed the assessment orders for the periods. Aggrieved by the orders of the CTO, the appellants filed appeals before the ADC. However, the ADC partly allowed and remanded and partly dismissed the appeals. Aggrieved by these orders of the ADC, the appellants preferred the present appeals before this Tribunal, disputing the levy of tax on the sales of Cotton grey fabrics @ 4%. Similarly, the JC revised the orders of the ADC under Section - 20(2) of the APGST ACT, in T.A. Nos. stated supra. Being aggrieved by these revision orders of the JC, the appellants also filed appeals before this Tribunal.
(2.) CONTENTIONS : -
The appellants contended that the impugned orders of the ADC were illegal and contrary to facts. The orders were passed in violation of settled law. The goods enumerated in IV -Schedule to the APGST Act were generally exempted from levy of tax. Under Item -5 of IV -Schedule, cotton fabrics, man made fabrics and woolen fabrics were exempted. Item -5 of III -Schedule reads as below:
"Cotton fabrics, man made fabrics and woolen fabrics (4005) "
The Explanation appended under IV Schedule to the Act reads as under:
"The goods mentioned in Entries -5, 6 and 7 of the this Schedule shall be goods included in the relevant heads and sub -heads of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, (for short, "the ADE") but does not include goods where no ADE are levied under that Schedule."
There was no dispute in the fact that the goods sold were declared goods. They have relied on Section - 3(1) of the Additional Duties of Excise Act, which reads as follows:
"Section 3(1) Levy and collection of Additional Duties - (1) There shall be levied and collected in respect of the goods described in column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto duties of excise at the rate or rates specified in column (4) of the said Schedule."
Additional Duty has to be therefore levied at the rate specified in column (4) of the First Schedule.
Therefore, it was decided that even as per the ADC, duty is leviable at nil rate. Further, the learned ADC also stated once the payment of tax is at nil rate, it can be construed as tax levied under Schedule of ADE Act 1957. Hence it is admitted by the Appellate Authority, that additional duty is levied, may be at NIL rate on the goods in dispute.
It was further submitted that it is stated by the Appeal Authority what is stated under the Schedule is not ADE is leviable at nil rate on disputed commodity, whereas Explanation to IV Schedule requires actual levy of tax for inclusion in Entry -5 of IV -Schedule. It is submitted that the Appellate Authority has erred in interpreting the provisions of the Act by holding that the Explanation under IV Schedule warrants actual levy of duty. The Explanation contains two clauses, first clause says the goods mentioned in Entries -5, 6 & 7 of this Schedule shall be goods included in the relevant heads and sub -heads of the First Schedule to the ADE Act. The case of the appellants satisfies the condition. It was also further submitted the second clause of the Explanation reads, but does not include goods where ADE are levied under that Schedule. There cannot be any levy of duty. There cannot be any levy by any authority unless it is provided in the Schedule. The Schedule provided the levy of ADE at nil rates as admitted by the ADC. Beyond this there cannot be any actual levy. It was decided that, in the present case, simply the Explanation under the IV -Schedule has to be interpreted and no more. The appellants submit that at one hand the authority admits that duty is leviable at nil rate on other hand it states that if cannot be construed that it is levied. The observation is self contradictory.
To support their argument, they have relied on Advance Ruling issued under Section -67 of APVAT Act, 2005 in CCT Ref. No. PMT/P & L/A.R. Com/36/2005 dated 10.5.2005 and submitted that the Commercial Tax Department at Commissionerate level has been consistently holding the opinion that no tax is leviable under the Sales Tax Law on the fabrics in question. They submitted that the Hon'ble STAT in the case of M/s. Jayasree Enterprises in TA Nos. 633, 634, 1455 and 1456 of 1999 dated 25.7.2002 held that levy of nil rate of duty under the ADE Act amounts to levy of duty specifying the condition prescribed under the Explanation to the Fourth Schedule to the Act. This decision is binding on all the authorities in the Department. The learned Appellate Authority cannot violate this decision by making assumptions and presumptions.
The learned AR mainly relied on the case of M/s. Hico Products Limited, Appellant Vs. Collector of Central Excise -Respondent : (1994) 71 ELT 339 (SC) and also on the decision of this Tribunal in TA. No. 820/2005, dated 25.10.2010. Further reliance was placed on the Advance Ruling issued by the ARA under Section - 67 of the APVAT Act, 2005 in CCT's Ref. No. PMT/P & L/A.R. Com/36/2005 dated 10.5.2005.
The learned SR on the contrary submitted that the word "levy" in the Explanation shall be understood as "levy and collection" and such kind of technical interpretation, as submitted by the AR, in the instant case will defeat the intention of the legislature and cannot, therefore be accepted. To this extant he traced down the legislative history of ADE Act and also the decisions of Honourable Supreme Court of India in the cases of N.B. Sanjana, Assistant Collector of Central Excise, Bombay and Others, Appellants Vs. The Elphinstone Spinning and Weaving Mills Company Ltd., Respondent, 1971 -(058) -AIR -2039 -SC, K.P. Varghese, Appellant Vs. Income Tax Officer, Ernakulam and Another, Respondents : 1981 -(068) -AIR -1922 -SC, M/s. Girdhari Lal and Sons, Appellant Vs. Balbir Nath Mathur and Others, Respondents : 1986 -(073) -AIR -1499 -SC. He also relied on GO Ms. No. 2328, Revenue, 13th December, 1957 and also on the circular No. dated 27th June, 2002 issued by GOI. He contended that the levy of sales tax on certain commodities was exempted when the Additional Duties of Excise Act 1957 was enacted. In the very beginning Government of Andhra Pradesh issued G.O. Ms. No. 2328, Revenue Dt. 3 -12 -1957 and that it is clearly mentioned in the said G.O., that the exemption is available if and only if "the dealer proves to the satisfaction of the assessing authority that additional duties of excise have been levied and collected" on such commodities, which manifests the intention of the legislature that exemption is made available only when Additional Excise Duty is levied and collected but not merely levied. To support his arguments he relied on the statement of objects and reasons of Act 5 of 1968 of Karnataka General Sales Tax Act.
In reply the learned AR argued that there is absolutely no condition that the Additional Excise Duty (AED) must have been paid for availing the exemption from sales tax. The AR relied on the decisions of Sri Ramakrishna Oil & Dhall Mill, Eluru Vs. State of A.P. (TA No. 1393/1999, dated 26.09.2003) and State of A.P. Vs. Sri Vasavi Traders, Gadwal : 35 APSTJ 189. The Explanation as it appears under IV Schedule to the APGST ACT, has to be interpreted and not with reference to an irrelevant and inapplicable decision in view of the above said decisions. Further G.O. Ms. No. 2328 Revenue, dated 13.12.1957 is not relevant in the present issue as it is to be decided with reference to the Explanation under IV -Schedule of the APGST Act. Further more, there are no merits in the arguments of the SR and there are no circumstances warranting review of the earlier decision on the subject. Finally, the appellants' AR prayed for allowing the appeals.
The submissions of the learned AR and the learned SR were heard.
(3.) POINTS : -
The points for determination in this appeal are as under: -
a) Whether cotton fabrics, which were exempted by Notification issued under ADE Act, 1957, are exempted from levy of sales tax under the APGST ACT 1957, in view of the Explanation to the IV Schedule of the Act.
b) To what relief?;